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Shareholders of KMR will also receive a $1.29 dividend ($5.16 annualized) payable on Feb. 14, 2013, to shareholders of record as of Jan. 31, 2013. The dividend to KMR shareholders will be paid in the form of additional KMR shares. The dividend is calculated by dividing the cash distribution to KMP unitholders by KMR’s average closing price for the 10 trading days prior to KMR’s ex-dividend date.

Kinder Morgan Energy Partners, L.P. (NYSE: KMP) is a leading pipeline transportation and energy storage company and one of the largest publicly traded pipeline limited partnerships in America. It owns an interest in or operates approximately 46,000 miles of pipelines and 180 terminals. The general partner of KMP is owned by Kinder Morgan, Inc. (NYSE: KMI). Kinder Morgan is the largest midstream and the third largest energy company in North America with a combined enterprise value of approximately $100 billion. It owns an interest in or operates approximately 75,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO
2 and other products, and its terminals store petroleum products and chemicals and handle such products as ethanol, coal, petroleum coke and steel. KMI owns the general partner interest of KMP and El Paso Pipeline Partners, L.P. (NYSE: EPB), along with limited partner interests in KMP and EPB and shares in Kinder Morgan Management, LLC (NYSE: KMR). For more information please visit
www.kindermorgan.com.

Please join Kinder Morgan at 4:30 p.m. Eastern Time on Wednesday, Jan. 16, at www.kindermorgan.com for a LIVE webcast conference call on the company’s fourth quarter earnings.

The non-generally accepted accounting principles, or non-GAAP, financial measures of distributable cash flow before certain items, both in the aggregate and per unit, and segment earnings before depreciation, depletion, amortization and amortization of excess cost of equity investments, or DD&A, and certain items, are presented in this news release.Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income or any other GAAP measure of liquidity or financial performance.Distributable cash flow before certain items is a significant metric used by us and by external users of our financial statements, such as investors, research analysts, commercial banks and others, to compare basic cash flows generated by us to the cash distributions we expect to pay our unitholders on an ongoing basis.Management uses this metric to evaluate our overall performance. It also allows management to simply calculate the coverage ratio of estimated ongoing cash flows to expected cash distributions.Distributable cash flow before certain items is also an important non-GAAP financial measure for our unitholders because it serves as an indicator of our success in providing a cash return on investment.This financial measure indicates to investors whether or not we typically are generating cash flow at a level that can sustain or support an increase in the quarterly distributions we are paying pursuant to our partnership agreement.Our partnership agreement requires us to distribute all available cash.Distributable cash flow before certain items and similar measures used by other publicly traded partnerships are also quantitative measures used in the investment community because the value of a unit of such an entity is generally determined by the unit’s yield (which in turn is based on the amount of cashdistributions the entity pays to a unitholder).The economic substance behind our use of distributable cash flow before certain items is to measure and estimate the ability of our assets to generate cash flows sufficient to make distributions to our investors.

We define distributable cash flow before certain items to be limited partners’ pretax income before certain items and DD&A, less cash taxes paid and sustaining capital expenditures for KMP, plus DD&A less sustaining capital expenditures for Rockies Express through Oct. 31, 2012, Midcontinent Express, Fayetteville Express, KinderHawk through second quarter 2011, EagleHawk, Eagle Ford, El Paso Natural Gas, Bear Creek Storage Company, Red Cedar, Cypress and EP Midstream Investment Co., LLC, our equity method investees, less equity earnings plus cash distributions received for Express and Endeavor, additional equity investees.Distributablecash flow before certain items per unit is distributable cash flow before certain items divided by average outstanding units.“Certain items” are items that are required by GAAP to be reflected in net income, but typically either (1) do not have a cash impact, for example, goodwill impairments, allocated compensation for which we will never be responsible, and results from assets prior to our ownership that are required to be reflected in our results due to accounting rules regarding entities under common control, or (2) by their nature are separately identifiable from our normal business operations and in our view are likely to occur only sporadically, for example legal settlements, hurricane impacts and casualty losses.Management uses this measure and believes it is important to users of our financial statements because it believes the measure more effectively reflects our business’ ongoing cash generation capacity than a similar measure with the certain items included.For similar reasons, management uses segment earnings before DD&A and certain items in its analysis of segment performance and managing our business.We believe segment earnings before DD&A and certain items is a significant performance metric because it enables us and external users of our financial statements to better understand the ability of our segments to generate cash on an ongoing basis.We believe it is useful to investors because it is a measure that management believes is important and that our chief operating decision makers use for purposes of making decisions about allocating resources to our segments and assessing the segments’ respective performance.

We believe the GAAP measure most directly comparable to distributable cash flow before certain items is net income.Our calculation of distributable cash flow before certain items, which begins with net income after subtracting certain items that are specifically identified in the accompanying tables, is set forth in those tables.Net income before certain items is presented primarily because we use it in this calculation.Segment earnings before DD&A as presented in our GAAP financials is the measure most directly comparable to segment earnings before DD&A and certain items.Segment earnings before DD&A and certain items is calculated by removing the certain items attributable to a segment, which are specifically identified in the footnotes to the accompanying tables, from segment earnings before DD&A.In addition, segment earnings before DD&A as presented in our GAAP financials is included on the first page of the tables presenting our financial results.

Our non-GAAP measures described above should not be considered as an alternative to GAAP net income, segment earnings before DD&A or any other GAAP measure. Distributable cash flow before certain items and segment earnings before DD&A and certain items are not financial measures in accordance with GAAP and have important limitations as analytical tools. You should not consider either of these non-GAAP measures in isolation or as a substitute for an analysis of our results as reported under GAAP.Because distributable cash flow before certain items excludes some but not all items that affect net income and because distributable cash flow measures are defined differently by different companies in our industry, our distributable cash flow before certain items may not be comparable to distributable cash flow measures of other companies.Segment earnings before DD&A and certain items has similar limitations.Management compensates for the limitations of these non-GAAP measures by reviewing our comparable GAAP measures, understanding the differences between the measures and taking this information into account in its analysis and its decision making processes.

This news release includes forward-looking statements.These forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management, based on information currently available to them. Although Kinder Morgan believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance that such assumptions will materialize. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include those enumerated in Kinder Morgan’s reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they were made, and except to the extent required by law, Kinder Morgan undertakes no obligation to update or review any forward-looking statement because of new information, future events or other factors.Because of these uncertainties, readers should not place undue reliance on these forward-looking statements.

Kinder Morgan Energy Partners, L.P. and Subsidiaries

Preliminary Consolidated Statement of Income

(Unaudited)

(in millions except per unit amounts)

Three Months Ended December 31,

Year Ended December 31,

2012

2011

2012

2011

Revenues

$

2,510

$

1,923

$

8,642

$

7,889

Costs, expenses and other

Operating expenses

1,391

1,055

4,521

4,768

Depreciation, depletion and amortization

297

243

1,093

928

General and administrative

114

86

493

473

Taxes, other than income taxes

54

41

223

174

Other expense (income)

-

4

(28

)

(11

)

1,856

1,429

6,302

6,332

Operating income

654

494

2,340

1,557

Other income (expense)

Earnings from equity investments

114

69

339

224

Amortization of excess cost of equity investments

(2

)

(2

)

(7

)

(7

)

Interest, net

(174

)

(133

)

(635

)

(513

)

Other, net

4

7

18

(149

)

Income before income taxes

596

435

2,055

1,112

Income taxes

10

(12

)

(30

)

(45

)

Income from continuing operations

606

423

2,025

1,067

Income from discontinued operations

15

56

160

201

Loss on remeasurement to fair value and disposal of discontinued operations

(2

)

-

(829

)

-

(Loss) income from discontinued operations

13

56

(669

)

201

Net income

619

479

1,356

1,268

Net income attributable to Noncontrolling Interests

(5

)

(4

)

(17

)

(10

)

Net income attributable to KMP

$

614

$

475

$

1,339

$

1,258

Calculation of Limited Partners' interest in net income (loss) attributable to KMP

Income from continuing operations attributable to KMP

$

601

$

419

$

2,001

$

1,059

Less: Pre-acquisition earnings allocated to General Partner

-

-

(23

)

-

Add: Drop-down asset group severance expense allocated to General Partner

9

-

9

-

Less: General Partner's remaining interest

(386

)

(303

)

(1,410

)

(1,173

)

Limited Partners' interest

224

116

577

(114

)

Add: Limited Partners' interest in discontinued operations

13

55

(655

)

197

Limited Partners' interest in net income

$

237

$

171

$

(78

)

$

83

Limited Partners' net income (loss) per unit:

Income from continuing operations

$

0.61

$

0.35

$

1.64

$

(0.35

)

Income (loss) from discontinued operations

0.03

0.16

(1.86

)

0.60

Net income (loss)

$

0.64

$

0.51

$

(0.22

)

$

0.25

Weighted average units outstanding

368

334

351

326

Declared distribution / unit

$

1.29

$

1.16

$

4.98

$

4.61

Three Months Ended December 31,

Year Ended December 31,

2012

2011

2012

2011

Segment earnings before DD&A and amortization of excess investments

Products Pipelines

$

178

$

159

$

670

$

463

Natural Gas Pipelines

472

227

1,349

546

CO2

334

276

1,322

1,099

Terminals

144

179

709

704

Kinder Morgan Canada

71

52

229

202

$

1,199

$

893

$

4,279

$

3,014

Kinder Morgan Energy Partners, L.P. and Subsidiaries

Preliminary Earnings Contribution by Business Segment

(Unaudited)

(in millions except per unit amounts)

Three Months Ended December 31,

Year Ended December 31,

2012

2011

2012

2011

Segment earnings before DD&A and amort. of excess investments (1)

Products Pipelines

$

176

$

161

$

703

$

694

Natural Gas Pipelines (2)

474

290

1,374

951

CO2

337

281

1,326

1,094

Terminals

198

184

752

701

Kinder Morgan Canada

71

51

229

199

Total

1,256

967

4,384

3,639

Segment DD&A and amortization of excess investments

Products Pipelines

$

31

$

28

$

121

$

109

Natural Gas Pipelines (3)

87

49

253

163

CO2

115

110

441

439

Terminals

52

51

205

195

Kinder Morgan Canada

14

14

56

56

Total

299

252

1,076

962

Segment earnings contribution

Products Pipelines (1)

$

145

$

133

$

582

$

585

Natural Gas Pipelines (1)

387

241

1,121

788

CO2 (1)

222

171

885

655

Terminals (1)

146

133

547

506

Kinder Morgan Canada (1)

57

37

173

143

General and administrative (1) (4)

(108

)

(86

)

(432

)

(387

)

Interest, net (1) (5)

(180

)

(138

)

(632

)

(531

)

Net income before certain items

669

491

2,244

1,759

Certain items

Loss on disposal and remeasurement of discontinued operations to fair value

(2

)

-

(829

)

(167

)

Allocated non-cash compensation

-

2

-

(82

)

Acquisition costs (6)

(5

)

-

(8

)

(2

)

Legal expenses (7)

-

(2

)

-

(3

)

Legal reserves (8)

-

(1

)

(9

)

(235

)

Pre-acquisition earnings allocated to General Partner (9)

-

-

23

-

Environmental reserves

(2

)

(3

)

(36

)

(10

)

Mark to market and ineffectiveness of certain hedges (10)

(3

)

(5

)

(11

)

5

Insurance deductible, casualty losses and reimbursements (11)

(51

)

(4

)

(41

)

(3

)

Gain (loss) on sale of assets and asset disposition expenses (12)

-

1

15

16

Release of tax reserves related to pre-acquisition periods (13)

18

-

18

-

Severance (14)

(5

)

-

(9

)

-

Write-off of under collected fuel (15)

-

-

-

(10

)

Other (16)

-

-

(1

)

-

Sub-total certain items

(50

)

(12

)

(888

)

(491

)

Net income

$

619

$

479

$

1,356

$

1,268

Less: Pre-acquisition earnings allocated to General Partner

-

-

(23

)

-

Add: Drop-down asset group severance expense allocated to General Partner

9

-

9

-

Less: General Partner's remaining interest in net income (17)

(386

)

(304

)

(1,403

)

(1,175

)

Less: Noncontrolling Interests in net income

(5

)

(4

)

(17

)

(10

)

Limited Partners' net income (loss)

$

237

$

171

$

(78

)

$

83

Net income before certain items

$

669

$

491

$

2,244

$

1,759

Less: Noncontrolling Interest before certain items

(6

)

(4

)

(22

)

(17

)

Net income attributable to KMP before certain items

663

487

2,222

1,742

Less: General Partner's interest in net income before certain items (17)

Includes $63 in 4Q 2011 and $238 YTD 2011, and $15 in 4Q 2012 and $167 YTD 2012 related to assets classified for GAAP purposes as discontinued operations.

Excludes $0 in 4Q 2012 and $131 YTD 2012 from our drop down asset group for periods prior to our acquisition date of August 1, 2012, which is included in certain items above.

(3)

Includes $7 in 4Q 2011 and $27 YTD 2011, and $0 in 4Q 2012 and $7 YTD 2012 of DD&A expense related to assets classified for GAAP purposes as discontinued operations.

Excludes $0 in 4Q 2012 and $31 YTD 2012 of DD&A expense from our drop down asset group for periods prior to our acquisition date of August 1, 2012, which is included in certain items above.

(4)

General and administrative expense includes income tax that is not allocable to the segments: 4Q 2011 - $1, YTD 2011 - $8, 4Q 2012 - $2, YTD 2012 - $9. Excludes $0 in 4Q 2012 and $56 YTD 2012 of G&A expense from our drop down asset group for periods prior to our acquisition date of August 1, 2012, which is included in certain items above.

(5)

Interest expense excludes interest income that is allocable to the segments: 4Q 2011 - $5, YTD 2011 - $20, 4Q 2012 - $4, YTD 2012 - $17. Excludes $0 in 4Q 2012 and $21 YTD 2012 of interest expense from our drop down asset group for periods prior to our acquisition date of August 1, 2012, which is included in certain items above.